Mazda to build small Toyota in Mexico for US consumption

Mazda and Toyota have announced a partnership to produce a new vehicle for our market. Mazda will build a subcompact economy car for North America based on its own Mazda2 at its soon-to-be-finished facility in Mexico for sale under the Toyota banner. The plant will build around 50,000 units per year once production begins in during the summer of 2015, leaving a further 90,000-unit capacity for Mazda vehicles.

Toyota has invested a proportional amount of funds in the plant's production equipment to offset the cost, and hopes to have a more competitive North American lineup as a result of the collaboration. Mazda, meanwhile gains the benefit of spreading production costs over a greater number of vehicles per year.

The move certainly makes sense as Japanese manufacturers look to send more manufacturing out of Japan in the face of the stronger yen. In addition, last year's earthquake and tsunami disasters underscored the need for a production network capable of flexibly responding to localized disasters, leaving many Japanese automakers with production delays and thin supply.